business plan - fbla-pbl.org

Business Plan Warren Township High School

Illinois 2016-17

Timothy Le Nicholas Zblewski

Boba Blended | 2016-17 Business Plan

Page 1

Table of Contents Executive Summary ............................................................................................................................... 3

Company Profile .................................................................................................................................... 4

Legal Form of Business...................................................................................................................... 4

Effective Date of Business................................................................................................................. 4

Company Mission Statement & Vision ............................................................................................. 4

Company Governance ....................................................................................................................... 4

Company Location ............................................................................................................................. 5

Immediate Development Goals ........................................................................................................ 5

Overview of Company’s Financial Status ......................................................................................... 5

Industry Analysis .................................................................................................................................... 5

Description of Industry...................................................................................................................... 5

Size ..................................................................................................................................................... 6

Growth Rates ..................................................................................................................................... 6

Nature of Competition ...................................................................................................................... 6

History ................................................................................................................................................ 6

Target Market ........................................................................................................................................ 7

Size ..................................................................................................................................................... 7

Growth Potential ............................................................................................................................... 7

Needs ................................................................................................................................................. 7

Analysis of Market ............................................................................................................................. 7

Competition ........................................................................................................................................... 8

Key Competitors ................................................................................................................................ 8

Potential Future Competitors ......................................................................................................... 10

Marketing Plan and Sales Strategy ...................................................................................................... 10

Key Message .................................................................................................................................... 10

Message Delivery ............................................................................................................................ 10

Sales Procedures ............................................................................................................................. 12

Operations ........................................................................................................................................... 13

Business Facilities ............................................................................................................................ 13

Production Plan ............................................................................................................................... 14


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Workforce Plan ................................................................................................................................ 15

Impact of Technology...................................................................................................................... 15

Management and Organization .......................................................................................................... 16

Key Employees................................................................................................................................. 16

Advisory Committee ........................................................................................................................ 17

Employee Process ........................................................................................................................... 17

Compensation and Incentives ........................................................................................................ 18

Long-Term Development ..................................................................................................................... 18

Future Goals .................................................................................................................................... 19

Risks and Potential Adverse Results ............................................................................................... 20

Strategy for Future Goals ................................................................................................................ 20

Financials.............................................................................................................................................. 20

Balance Sheet .................................................................................................................................. 21

Start-up Analysis .............................................................................................................................. 21

Loan .................................................................................................................................................. 21

Year 1 Monthly Cash Flow .............................................................................................................. 23

Year 1 Monthly Income Statement ................................................................................................ 24

Yearly Income Statements for Years 1, 3 & 5 ................................................................................ 26

Financial Assumptions..................................................................................................................... 27

Supporting Documents ........................................................................................................................ 28

Boba Blended Menu........................................................................................................................ 28

Opening Day Flyer ........................................................................................................................... 29

Works Cited ..................................................................................................................................... 30


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Executive Summary

Beverages are the staple to any lifestyle. Everyone has different aspirations; some to gain muscle, so they

drink protein beverages; some to lose weight, so they drink tea; some to stay awake, so they drink coffee.

However, Americans have fallen in love with coffee, leaving anyone who isn’t a coffee lover nowhere to

turn to for a beverage. Boba Blended is positioned to bring a solution to this problem by offering a variety

of beverages in Gurnee, Illinois, in March, 2018.

Boba Blended will offer four main beverages: boba tea, smoothies, tea, and coffee. Additionally,

customers will be provided with modern study spaces and quiet rooms to maximize customer

satisfaction. Additives, such as tapioca or protein powder, will be available to every customer to maximize

customer satisfaction and make Boba Blended unique. The business is focused on creating superior

beverages that will satisfy customers and maximize profits. According to Food Business News, soda

consumption has decreased while organic options have soared in demand in the past five years. Boba

Blended intends to meet that demand in Gurnee by offering a unique type of beverage: boba tea. This

Taiwanese beverage, also known as boba tea, is a unique type of tea that contains a tea base mixed with

fruit or milk; it is typically accompanied with tapioca balls or fruit jellies. Boba Blended will also have

options such as smoothies, coffee, and regular tea to ensure any customer will be satisfied.

As owners of a limited liability company, Timothy Le and Nicholas Zblewski bring marketing, accounting

and finance, and business administration skills to Boba Blended. With this combination of skills and a

unique product, boba tea, Boba Blended will be able to flourish. Timothy and Nicholas will also give back

to the community through donations, fundraisers for local teams or clubs, and sponsorships. Additionally,

the store will have a layout that will be student-friendly (high-speed Wi-Fi, outlets at each table, and

private rooms) so students and business professionals will feel comfortable in the store, and other

customers will also enjoy the humble environment.

Sales are projected from nearby competitor’s financials and extensive research. Additionally, sales

estimates were created honestly and conservatively to give Boba Blended realistic projections. Through

hosting fundraisers, partnering with local businesses, and utilizing social media, Boba Blended anticipates

a strong customer return rate. In future years, Boba Blended will expand to cover the Midwest region of

the United States and will manufacture ready-to-drink beverages.


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Company Profile

Legal Form of Business

Boba Blended will be a limited liability company. This form of business will allow for Boba Blended to

determine its structure, protect the owners’ assets, and build business credit. As LLCs are flexible in how

they operate, Timothy and Nicholas can determine how profits are utilized. LLCs also keep owners’ assets

protected, which will allow for them to engage in greater risks than a normal partnership, such as

expanding. Unlike a partnership, LLCs can develop business credit, which will allow for Timothy to keep

track of financials through a business credit report and for Boba Blended to purchase future assets on

account, rather than on the owners’ personal credit. These advantages are why Boba Blended is a limited

liability company.

Effective Date of Business

With the concept created in January, 2017, by Timothy Le and Nicholas Zblewski, Boba Blended will begin

minor renovations in January, 2018, and will begin operations by opening its store in Gurnee, Illinois, on

March 1, 2018.

Company Vision & Mission Statement

The vision of Boba Blended is to provide top-quality beverages at affordable prices. Students and families

can purchase a soothing beverage on their way to school or work, but can also enjoy their beverage in the

comfort of the student-friendly store.

Boba Blended’s mission is to assist students and professionals in reaching their full potential. By offering

student-friendly study spaces, high-quality beverages at reasonable prices, and community support,

Timothy, Nicholas, and Boba Blended will be able to achieve this mission.

Company Governance

The company will be equally governed by two individuals, Timothy Le and Nicholas Zblewski. Boba

Blended will have an advisory committee consisting of individuals crucial to the success of Boba Blended.

This committee will be included in executive decisions of the company and monthly meetings will be held

between the owners and the committee to evaluate the financial status of the business and ensure the

company is operating ethically. Ultimately, Timothy and Nicholas will have the final word; however, if no

compromise exists between them, the advisory committee will vote.


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Company Location

The company’s store will be located at 1508 Nations Drive, Gurnee, Illinois. Gurnee is an ideal location for

Boba Blended to begin operations since boba tea is new in the Midwest, and Gurnee is located 40 miles

from Chicago. Gurnee is also the entertainment center of suburbs north of Chicago due to its popular

attractions: Six Flags Great America, Gurnee Mills Mall, and Great Wolf Lodge. Additionally, Boba Blended

is within 20 miles of six high schools and two colleges, allowing a close connection between Boba Blended

and local schools. Boba Blended is located next to a major interstate (I-94), which makes traveling to the

store convenient for customers.

Immediate Development Goals

To provide high-quality products, a student-friendly study environment, and convenience in purchasing

beverages, Boba Blended will need to meet the following immediate goals:

➢ Remodel the existing building to create a study-friendly work environment

➢ Update the drive-thru to be more appealing and efficient

➢ Form a mutually beneficial partnership with the neighboring fitness facility, FitNation

➢ Develop and implement a phone app along with a reward incentive program

Overview of Company’s Financial Status

The total amount needed to initially establish Boba Blended is $97,000. This total amount will be used to

remodel the retail store, purchase necessary equipment, and advertise the opening. Sales are projected

from nearby competitors and extensive research. Sales projections and expenses were created honestly

and conservatively, and profits are still projected to be positive within the first year of operation.

Industry Analysis

Description of Industry

From 1990 to 2014, the wholesale value of the tea industry grew six-fold, from $1.8 billion to $10.8

billion, according to US Market Research. Tea has become an adequate substitute for caffeine-induced,

sugar-enhanced beverages such as Coca-Cola. Beverages similar to Coca-Cola have been found in

numerous studies to be closely linked to increased risk of Type 2 diabetes. In the past five years,

traditional soda has lost $1 billion in revenue, while healthier beverages continue to grow. As society

shifts away from over-consuming sweetened beverages, the demand for healthy alternatives grows.


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According to Bubble Teaology, tea sales have increased 165% since 1990, with the number of tea rooms

offering sit down service rising about 15%. American interest in tea certainly owes some of its increase to

the rise of gourmet coffee shops around the country in this same period. Most of working America has

accepted the idea of expensive hot beverages as affordable luxuries, thanks to the marketing efforts of

Starbucks. At the same time, fashion trends are always on the move. Now that premium coffee beverages

are so widely accepted, savvy customers are looking for new, more unique treats to enjoy. Spurred by

studies touting tea’s health benefits, American consumers have been turning to tea as a more “natural”

affordable luxury. In addition, the cultural connection of tea with all things “civilized” has made tea

knowledge a mark of sophistication among many Americans.

Size

The tea beverage industry was valued at $38.2 billion in 2015 and is projected to grow to $44.3 billion by

2021. Additionally, the non-alcoholic beverage and soft beverage industries are valued at $994.1 billion.

The large markets of both the tea industry and non-alcoholic beverage industry allow Boba Blended to

have room for growth.

Growth Rates

Specialty tea, like boba tea, is growing at extraordinary rates, according to the Tea Association of the

United States of America. Specialty tea has been growing at an annual 8-10% rate, mainly due to

students’ and business people’s delight in the discovery of new and differentiated flavors. This growth

rate is expected to continue for the next five years, indicating an urgency to join the market.

Nature of Competition

Very few competitors truly compete with boba tea; however, coffee and soda are the default beverage

for most, so they already control 70% of the non-alcoholic beverages market. Since boba tea is a new and

unique type of beverage, many Americans will be hesitant to try the beverages. That makes the

company’s competition a distinct threat. Competition could also bring new customers. Customers who

are trying to shift away from the sugar-enhanced beverages may be eager to try boba tea.

History

The oldest known boba tea consisted of a mixture of hot Taiwanese black tea, small tapioca pearls,

condensed milk, and syrup made in 1980. Liu Han-Chieh noticed Japanese methods of making coffee to

be peculiar, so he applied them to tea and included his traditional white tapioca. Most boba tea

beverages are served cold; however, they can be served hot. Boba tea first gained popularity with its


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boba green tea, which uses a jasmine-infused green tea base. Soon, fruit variations of tapioca began,

known as lychee or jellies. Rather than having large black tapioca, small pearls of peach or plum flavoring

became popular. Then tapioca began being consumed with fruit beverages, leading to large popularity

across Taiwan. This mass popularity in Taiwan inspired Timothy and Nicholas to incorporate that beverage

into the U.S. The owners believe that Americans will be able to see the health benefits, such as increased

immune system efficiency and reduced risk of heart attack. This, coupled with the bountiful flavors that

boba tea offers, will bring new customers to the business.

Target Market

Size

Gurnee, Illinois, is located near Wisconsin in northern Lake County. The total population size of Lake

County, Illinois, is 703,462 with a median age of 36.7 years old, according to the 2010 U.S. Census Bureau.

Fifty-four percent of that population consists of people ranging from 16 to 50 years old. Sixty-two percent

of that population consists of students and businesspeople, making them a worthy target market.

Growth Potential

Local school districts see a slight increase in high school and college registration, indicating more students

are coming to the Lake County area. Additionally, Chicago Tribune noted Lake County as second in the

nation for wage growth. This wage growth will allow for businesspeople to have more discretionary

income. This, in turn, allows for Boba Blended to have an abundance of potential in Lake County.

Needs

Students and businesspeople often find themselves stressed due to loads of work, extracurricular,

obligations, and fast-paced lifestyles. Every student and businessperson needs a place to relax, focus on

work, and a refreshing beverage to accompany them. Boba Blended will allow for both students and

business people to utilize the conference rooms to conduct business meetings or study sessions.

Analysis of Market

Boba Blended is focusing on the 16- to 50-year-old demographic; more specifically, the students and

businesspeople within this age group in Lake County. Because the percentage of students and

businesspeople who consume tea (87% in 2015) is higher than the percentage of the total population of

the United States who consume tea (69% in 2015), students and businesspeople will be the ideal market

to target.


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Competition

Key Competitors

1. Starbucks--An American coffee company and coffeehouse chain.

a. Strengths

i. Brand loyalty among customers - Customers that habitually go to Starbucks

develop a bond with the business that can be difficult to break.

ii. Ambiance - Starbucks has created a consistent ambiance in every store.

Customers know to expect a rich, warm color scheme, alternative music, organic-

looking art, and baristas in green aprons in every store.

iii. Convenience - Baristas work quickly and keep long lines moving, keeping wait

times low. They also maintain an image of high-quality products, giving

customers a confidence in how their beverage will taste.

b. Weaknesses

i. Higher price points - Starbucks charges relatively high prices for premium

beverages, making them less attractive to some consumers.

ii. Generalized standards for most products - Most Starbucks products are based on

generalized corporate standards, restricting Starbucks from creating products

unique to each store.

iii. Imitable products - Customers know what to expect from Starbucks and that

prevents Starbucks stores from being unique.

2. Dunkin’ Donuts--An American global donut company and coffeehouse chain.

a. Strengths

i. Strong brand name - Dunkin’ Donuts is known worldwide for their donuts and

coffee. Customers know what to expect when entering a Dunkin’ Donuts.

ii. A wide variety of products - Dunkin’ Donuts offers several options that

compliment a coffee. Thus, customers know that Dunkin’ Donuts can offer

options.

iii. Effective marketing and advertising strategies - As an international business,

Dunkin’ Donuts has a strong marketing team that boosts sales in Dunkin’ Donuts

on the local level.

b. Weaknesses

i. Poor franchise relationships - Dunkin’ Donuts has a significant history of lawsuits

with its franchisees, which hinders their expansion rate and management quality.

ii. Unappealing in-store ambience - Dunkin’ Donuts has developed a reputation of

being a quick fix. Studies show that customers expect their order in less than five

minutes.

iii. Lack of local support - Dunkin’ Donuts does not typically offer local fundraisers or

local community help.


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Boba Blended will be located in the heart of Gurnee, Illinois. While Boba Blended does not have a strong

brand name or brand loyalty, it has strengths where its competitors have weaknesses. For example, boba

tea naturally has a low production cost, thus allowing Boba Blended to charge lower prices than both

Starbucks and Dunkin’ Donuts. Additionally, the ingredients to create Boba Blended’s beverages are

organic and flavorful. These ingredients will result in tasteful beverages that can compete with Starbucks

and Dunkin’ Donuts imitable products.

The layout of the store will be convenient for both the customer and the employees. Employees will

individually craft customers’ beverages. After producing each beverage, the employee will deliver the

order to the customer.

One of Boba Blended’s goals is to be involved in the community. Hosting fundraisers for local events and

partnering with nearby businesses will be crucial to differentiating the company from Starbucks and

Dunkin’ Donuts. This will give Boba Blended both brand recognition and community support, traits that

are typically weak for a new business.

Another one of Boba Blended’s goals is to hire a paid marketing intern over the summer. This intern will

assist the owners during the summer months by handling the social media, connecting with other local

businesses, and building brand recognition. This will allow Boba Blended to compete with the some of the

marketing strengths that the competitors have.

While Boba Blended’s competitors may seem daunting, success is achievable. The combination of being a

convenient location, affordable pricing, and providing consistent quality will allow for Boba Blended to

become an intimidating competitor. Nicholas will focus on marketing to develop a reputable brand and

establish a presence in the Lake County area. Additionally, marketing will expose individuals in Lake

County to the idea of boba tea, creating a new market for the company.


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Potential Future Competitors

1. Liquid Fusion – A café offering loose leaf and boba tea, plus fruit freezes and coffee in a modern

and vibrant environment.

a. Barriers to enter

i. Location - Gurnee is a rapidly growing suburb of Chicago with limited retail space.

If Liquid Fusion were to enter, it would find difficulty locating a successful spot.

ii. High start-up costs - Property and equipment can be very costly in Gurnee, which

could deter Liquid Fusion if they desire a low entry cost.

Liquid Fusion is located 30 miles from Gurnee, Illinois, and has been expanding slowly. In the past ten

years, they have expanded from one location to two. A manager reported that Liquid Fusion’s owners are

not entirely committed to the success of their business. However, they may expand to Gurnee, Illinois,

making them a potential future competitor for Boba Blended.

Marketing Plan and Sales Strategy

Key Message

Boba Blended is inspiring students and professionals everywhere, one tasty and healthy beverage at a

time. Boba Blended will spread this message across Lake County to grow toward the company’s goals and

customer base. This message will be spread in a variety of ways.

Message Delivery

Before opening day, several flyers and advertisements will be posted to raise awareness of the business.

Then, during operations, Nicholas will continue marketing through hosting events, attending local fairs,

and other advertising methods. Nicholas will also deliver Boba Blended’s key message through his regular

use of social media. Social media will play a big role in marketing for Boba Blended. Developing a strong

online presence will be vital to increasing awareness of Boba Blended in the community and to increasing

customer traffic flow.


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Boba Blended is located on Nations Drive in Gurnee,

Illinois. Boba Blended is visible to the traffic of Grand

Avenue, a major thru-fare which has about 29,000

average daily traffic, and also I-94, which has about

97,900 average daily traffic. Additionally, nearby stores’

popularity, such as Starbucks and Culvers, will help

develop Boba Blended’s presence in Gurnee. The

company is also conveniently located approximately half a

mile from Six Flags Great America, which has

approximately 2.4 million visitors a year, and adjacent to

the overpass that connects to the Gurnee Mills Mall, which has about 23 million visitors a year.1 By

utilizing the company’s location and nearby tourist destinations through flyers and signs, the company’s

message will be delivered through the form of flyers and social media. An example of the opening flyer

can be found in the supporting documents section (p. 29).

Nicholas Zblewski will establish a partnership with the

neighboring gym, FitNation, within the first year of operation to

build a direct customer flow with “just out of the gym” people

and Boba Blended. A direct channel between Boba Blended and

FitNation will allow for Boba Blended to send their message

clearly.

“Blender”, Boba Blended’s phone application, created by Nicholas, will notify

customers whenever there is a “Hot Deal”. This application will also include the

entire menu in a visually pleasing format where customers will be able to scroll

through the beverage options (or use the view all function) and “swipe right” for

any beverage they wish to add to their shopping cart. Following the swipe will be

additives in a similar format that customers can “swipe left” to decline the

additive or “swipe right” to add that additive to the order/beverage. This way

customers can interact with the application and see the variety Boba Blended

1 Average daily traffic and visitor count derived from the 2010 Census.

Figure 1: Map Showing Annual Daily Traffic Around Boba Blended's Building

Figure 2: The Logo of Boba Blended's Partnering Gym

Figure 3: Image of the Boba Blended App's Home Screen


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offers. Additionally, the application will be updated whenever menu changes occur, along with price

changes by either Nicholas Zblewski or the summer intern.

To engage the community and get the company’s key message out there, there will be a community

oriented section with a chalkboard. On this chalkboard, frequent customers can sign their name and

create a tally of how many times they have been to the store. This method will develop a customer base

for Boba Blended and new customers can potentially see friends they have and come back with them in

the future. Also, the chalkboard will engage social media. Customers will be encouraged to tweet out or

snapchat their name on the chalkboard, allowing Boba Blended to connect with the community on a

personal level. Another part of the community oriented section is the business cork board. On this cork

board, businesses can post job fairs, employment opportunities, and other relevant local information.

Along with encouraging customers to utilize social media in the store,

Boba Blended will advertise their own social media. Boba Blended will

use Instagram and Twitter to notify the customers of “Hot Deals”,

upcoming events, and business updates. On the Instagram page, a

weekly photo will be uploaded, submitted by employees or customers.

On the Twitter page, surveys will be posted to allow customers to

provide feedback. Boba Blended will also use Facebook and LinkedIn to

post educational readings, upload weekly blogs about the future of Boba

Blended, and potentially stream live events. Nicholas will primarily

handle the social media accounts to directly convey Boba Blended’s key

message to customers.

Sales Procedures

One of the company’s immediate goals is to develop an incentive reward program to increase sales and

customer satisfaction. This program will reward frequent customers with beverages, merchandise, or

“shout outs” on the social media platforms. The program will have three levels: Tourist, Blendista, and

Blender. Each level can be achieved with a certain number of points, or as the program calls them,

tapioca. One dollar equals one tapioca. Any amount that is not exactly a dollar will count as a fraction of

tapioca, allowing customers and the program to keep an accurate measurement of the customer’s

spending and tapiocas. These levels will hold for an entire year and reset annually. The Blender app will

notify customers of upcoming deadlines for the programs.

Figure 4: Image of Social Medias Boba Blended Will Use


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1. Tourist, the first level of the incentive reward program, is achievable with the first purchase of a

beverage. After downloading Boba Blended’s mobile application, customers can redeem their

first beverage and instantly achieve the first level. Customers on the tourist level can also redeem

a free beverage when they achieve 50 tapiocas. Additionally, customers on the tourist level will

receive emails periodically with special coupons tailored for them. For example, a tourist can

receive a coupon for a free additive to any size beverage.

2. Blendista, the second level of the incentive reward program, is achievable after earning 250

tapiocas. Along with having previous level benefits, customers on the Blendista level will also

have access to after-hour events, late night study days (primarily for final exams), and

merchandise. Additionally, these customers will receive emails periodically with more prestigious

coupons tailored for them. For example, a Blendista can receive a coupon for a buy one get one

free any size beverage.

3. Blender, the third level of the incentive reward program, is achievable after earning 500 tapiocas

on the Blendista level. This will be the highest level obtainable in the incentive reward program.

Along with having previous level benefits, customers on the blender level can reserve study

spaces for up to two hours, excluding final exam days. The blender level will also allow customers

to receive $2.00 refills if the customer does not leave the store, for up to three refills a day.

The primary in-store sales procedure will be through the blender vendors. These machines will take

customers’ orders and allow for employees to quickly and accurately produce customers’ orders.

Additionally, Boba Blended will provide small snack foods, such as peanut butter and jelly sandwiches,

snack bars, and trail mix for customers in the store. Outlets will be accessible at every study space and

Wi-Fi will range throughout the store to allow students and business people to stay connected.

Operations

Business Facilities

Boba Blended’s facility on Nations Drive is a 4,704 square foot building with a 1.79 acre parking lot.

Approximately 80% of the building will be utilized for seating and customer resources to make it the most

customer-friendly store in Lake County. Additionally, the two blender vendors will be included in this

section. A blender vendor is a machine that will take customers’ orders, explained in more detail in the

production plan section. The remaining 20% of the building will be for the kitchen, staff room, and

storage room.


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The store will have a modern Asian-inspired interior, to mix the American style and boba tea concept. The

chairs and study spaces will be comfortable so students can study for long hours without having back

pain. There will be two study rooms that are sound-proof and contain monitors that can adapt to any

type of laptop. This room will be available to anyone when not reserved by customers on the blender

level. The monitor will allow for study groups to go through presentations, have video conferences, or

work together on a project. By offering conference rooms, the business hopes to draw in students and

business professionals for long periods of time. The floor plan below displays a glimpse of what the store

will look like. We have several tables along the walls for easier access to outlets and to have an open floor

space.

Production Plan

There will be three types of employees the owners, teatender, and summer intern. These three positions

will have overlapping duties such as preparing beverages, delivering beverages, and maintaining the

cleanliness of the store. Owners will be focused on the financial stability of the business, marketing, and

several other aspects of the company. Teatenders will focus mainly on preparing and delivering

beverages, along with being customer friendly. Summer interns will focus on marketing for the business;

however, they will also help during weekends as a manager of teatenders.

Upon entry to the store, a customer will be met with a blender vendor. There will be two blender vendors

to expedite orders. Through this customer-friendly machine, customers will create their own beverage. By

utilizing the blender vendor, customer-to-employee interaction will be minimized and customers will be

confident no errors will be made with their order. Once an order is completed, the machine will ask

customers if they would like to receive tapioca points for the Blender app or if they would like to sign-up

for rewards via email. By having this prompt, customers will be encouraged to download the app and

return frequently to earn rewards. After completing a cash or card payment, customers will receive a

Figure 5: Store Floor Plan


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receipt with their name and Boba Blended’s social media accounts. An employee will receive the order on

a monitor in the kitchen, prepare the beverage, and then deliver the beverage to the customer.

While the in-store production plan will require minimal customer-to-employee interaction, the drive-thru

production plan will require significantly more customer-to-employee interaction. Teatenders will have

headsets that will allow them to take customers’ orders. The teatender who completes a customer’s

order will also complete the payment process, as well as, deliver the beverage through the drive-thru

window.

Workforce Plan

One of the owners, Timothy or Nicholas, will always be at the store on weekends and will develop a

schedule with managers to balance the weekdays. With one of the owners present, it will reduce the

number of employees needed and also increase productivity by having a passionate manager, rather than

a hired one. However, when an owner goes on vacation, a selected manager will assume the

responsibilities. Along with Timothy or Nicholas, a teatender will be assisting with duties. On the

weekends, an additional teatender may be working to help manage customer flow. There will be a total

of six part-time teatenders and one summer intern, annually.

Typically, Nicholas will arrive at 6:00 a.m. to prepare for opening at 6:30 a.m. He will ensure the store is

clean and that there are enough supplies for morning operations. A teatender will come at 6:30 a.m. to

help Nicholas manage drive-thru traffic and update inventory. At 2:00 p.m., Timothy will change shifts

with Nicholas, and bring in necessary supplies to maintain operations. Timothy and the teatender on duty

will close the business at 10:00 p.m., clean up, and finalize inventory. Boba Blended will be open seven

days a week, excluding holidays, with a minimum of two employees present on weekdays and a minimum

of three employees present on weekends. These hours are subject to change; however, this will serve as

the general plan of operations. Managers will be incorporated if necessary.

Impact of Technology

Technology will be a crucial part of the business. The company relies on the cash register to accurately

document each transaction for future analysis. Technology seals the cups for beverages. Technology also

provides clear communication for customers using the drive-thru. Additionally, several customers will

utilize the phone application, Blender. The Blender Vendor will function through innovative coding and

this use of technology will increase sales for Boba Blended.


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Management and Organization

Boba Blended is owned and operated by Timothy Le and Nicholas Zblewski, business partners, as a limited

liability company. Timothy acts as the accountant and recruiter for employees. Nicholas acts as the

designer and marketer of products. Both partners will manage the store with their extensive experience

in management in their related fields as mentioned above. They will be balancing their knowledge of

beverage purchasing, brewing, and marketing, as well as, their knowledge of running a small, upscale

beverage business. All of these traits will ultimately create success for Boba Blended.

As local business owners, Timothy and Nicholas understand the importance of treating their employees

fairly. Each employee is crucial to the success of Boba Blended; however, inexperienced employees need

to be managed. Since employees are part-time or temporary, the company will implement a tactical

management style. Tactical management is a style in which the manager is more directive and

controlling; thus the manager is making major decisions while staying in close contact with employees

while they work. As employees develop skills and trust over time with the company, the company will

incorporate some aspects of strategic management. Employees with experience will be more involved in

decision making and will take responsibility for their work in this mix of management styles. Starting with

a tactical management style will allow new employees to learn the skills necessary to operate Boba

Blended through experience. Then, by incorporating strategic management, employees will have more

freedom and will feel like a team member. The managers, primarily the owners, will be responsible for

coordinating the talents of each employee to ensure Boba Blended performs well.

Key Employees

1. Owners

Timothy and Nicholas will be responsible for the entirety of the store and business. Nicholas will hold the

lead role in marketing the business; however, he will welcome Timothy’s input. Additionally, Nicholas will

manage the inventory and cleanliness of the store. Timothy will create work schedules for employees,

manage the business, and handle the financials of Boba Blended. Together, Timothy and Nicholas will be

able to manage and market the business. They will also ensure smooth customer flow and work flow, as

well as engage in customer interactions and aid teatenders in creating beverages. Additionally, the

owners will strive for a positive environment, ensuring each employee and customer feels comfortable

and positive in the store.


Page 17

2. Teatender

Teatenders will be the primary employees for Boba Blended. The primary role of a teatender is to create

quick, high-quality beverages. However, teatenders will be expected to engage in customer conversation,

maximize customer satisfaction, and frequently maintain the cleanliness of the store. Teatenders will also

process customers’ transactions after completing their product, ensuring any additives are included in the

final purchase.

3. Summer Intern

A unique type of employee Boba Blended will have is a summer intern. Each summer a college marketing

student will take over a few of Nicholas’ responsibilities of managing social media, developing marketing

material, and updating the Blender app. Additionally, the summer intern will serve as manager on

weekends and spend most of his or her time during the week pushing Boba Blended’s marketing agenda.

By having this intern, Nicholas can focus his attention on managing inventory and the store during the

busy months of the summer.

Advisory Committee

Since Boba Blended is a LLC, a board of directors is not required; however, an advisory committee

consisting of the accountant, a non-competitive local frozen yogurt entrepreneur, the family investor, and

the two owners will meet monthly. In the summer, the intern will sit in during these meetings. The

purpose of this monthly meeting is to update financials, evaluate the status of the business, and plan for

the next month. Additionally, this meeting will allow all parties to voice their opinion about the business

and give the owners guidance.

Employee Process

Teatender - Typically a part-time high school student or college student. The primary way employees will

be hired is through Boba Blended’s online application, which is accessible through the website and app. A

secondary method of finding employees will be to contact local high schools’ business departments and

ask for a list of qualified students to contact. Potential employees will be expected to submit a resume,

complete short answer questions, and undergo an interview conducted by Timothy. Timothy will

interview each applicant to ensure employees hired are responsible and have accountability. Flexible,

personable, and outgoing employees will be necessary to ensure Boba Blended will function and prosper.


Page 18

Summer Intern - A student in college majoring in marketing. Nearby colleges, such as Loyola University

and DePaul University, will be primary locations to recruit interns. Attending career fairs and utilizing the

colleges’ employment websites will allow for Boba Blended to find and recruit one summer intern

annually. Interns will work from the beginning of June to the end of September. Similar to teatenders,

Timothy will interview potential interns to ensure the intern has a strong character and diligent work

ethic.

Compensation and Incentives

Boba Blended promises prospective teatenders flexible hours, a clean and vibrant work environment, and

a free beverage with every shift. By offering them incentives similar to these, they will be satisfied

working as a teatender. Additionally, teatenders are paid above minimum wage, receiving $9.00 per hour

as starting pay. After the first 100 work hours, teatenders will gain an increase in hourly wages of $0.50.

By setting this standard, employees will be incentivized to dedicate their time with the company and grow

with Boba Blended. Pay raises thereafter will be given to teatenders who move into management

positions, show strong commitment to the company, or dedicate numerous extra hours to the company.

Each employee will go through an extensive evaluation by both Timothy and Nicholas to receive

additional pay raises.

Boba Blended promises summer interns up to a 35-hour week schedule. College students depend on

summer break to be their free time, so by giving summer interns a flexible and limited work week, they

will be able to enjoy the summer. Additionally, Boba Blended will not have to, under Illinois law, pay for

benefits, such as dental insurance or health insurance, for the intern. Summer interns receive the same

benefits as teatenders; however, receive a $10.00 hourly pay as a starting wage. While Boba Blended

believes employees should receive fair pay, Boba Blended also strives to maximize employee satisfaction.

Timothy and Nicholas will each receive salaries paid bi-weekly that add up to $35,000 each in the first

year. This salary is expected to increase by $5,000 each year, unless Boba Blended experiences growth

that surpasses the projected financials. If this occurs, then the salaries will increase as a percentage of

growth. Timothy will evaluate fair pay for the owners at the end of each fiscal year and consult the

advisory committee to ensure the pay increase is appropriate.


Page 19

Long-Term Development

Future Goals

By the third year of business, the company plans to complete three objectives. The first objective is to

ultimately maintain profit and build a strong relationship with nearby schools. By keeping costs low and

having a strong marketing presence, profits are projected to be positive. Also, by offering fundraisers and

by supporting local schools, Boba Blended will have a direct connection with local schools. The second

objective is to have an online presence within Lake County to directly connect with students. The

company’s wide usage of social media strategies will allow the company to achieve this objective. This

objective is crucial for Boba Blended to have a strong marketing presence as well. The third objective is to

become a central hub for students and business people in Lake County. Boba Blended will achieve this

objective by promoting the quiet study areas and conference rooms available at the store as well as by

reaching out to local school districts.

By the fifth year of business, Boba Blended will expand. Research shows that Libertyville, Illinois;

Waukegan, Illinois; and Kenosha, Wisconsin are three growing areas with an abundance of students and

potential. Thus, Boba Blended will expand to these three locations. Timothy and Nicholas will each

manage two stores; however, they will still uphold their co-owner duties. Additionally, Timothy and

Nicholas will evaluate Boba Blended’s mission, strategies, goals, objectives, and vision with the advisory

committee to keep up with technology and society to make any necessary changes. This will allow

Timothy and Nicholas to align their vision for the future of the company and ensure Boba Blended is in

the best shape for expansion.

By the tenth year of business, Boba Blended will be expanding further. Timothy and Nicholas will develop

a management system that will allow for stores to operate entirely without either owner's physical

presence. This system will include the hiring process, how to operate a store, and data on how other

stores performed in their first year. By having this system, Boba Blended will be able to expand across the

Midwest region of the U.S. efficiently. By utilizing this system, Boba Blended will expand to two major

cities: Chicago, Illinois and Milwaukee, Wisconsin during the tenth year of operations. By achieving this

goal, Boba Blended will develop a strong reputation and brand recognition in the Midwest region. Also at

the ten-year mark, Boba Blended will begin developing a ready-to-drink boba tea product that can be sold

off the shelf, so customers can enjoy beverages from the comfort of home.


Page 20

Risks and Potential Adverse Results

In having a unique main product, boba tea, which many Americans have not heard of, customers will be

hesitant to try the products of Boba Blended. However, to ensure every customer is satisfied, Boba

Blended will advertise the various other options available and the numerous additives customers can

have. By promoting this variety in Boba Blended’s marketing plan, Boba Blended will also lower the threat

of competitors. Unlike Starbucks and Dunkin’ Donuts, Boba Blended does not have an established brand

name to begin. Investing in Boba Blended’s marketing will allow for Boba Blended to begin creating a

respectable brand name for itself and allow for future expansion. With the innovative blender vendors

and other technologies in the store, we foresee possible technological difficulties. For example, the

blender vendors cease operations. While our cash registers serve for the drive-thru customers, they can

also serve for the in-store customers. Similar to any business, employees pose a risk to the company

through the foreseeable mistakes employees might make. However, the owners will train new employees

through the company programs to ensure any mistakes can be resolved quickly and turned into a learning

experience.

Strategy for Future Goals

Timothy and Nicholas will accomplish these goals by maintaining contact with the advisory committee,

receiving feedback from the community, and setting priorities. Monthly meetings with the advisory

committee and proper planning during these meetings will ensure Boba Blended is on track to achieve

their goals. During these meetings, the status of the business will be evaluated and the future goals of

Boba Blended will be discussed. By utilizing social media and customer surveys, customer feedback can be

recorded and analyzed to make any necessary changes for Boba Blended. Additionally, the owners will

align their views for the future of Boba Blended in a one hour, bi-weekly meeting. By developing the habit

of having frequent meetings, these meetings can later be used to work on achieving goals, such as re-

evaluating the company’s mission, strategies, goals, objectives, and vision.

Financials

Boba Blended will be using an accrual-basis method to more accurately recognize income and expenses in

the period to which they apply. Under this system, revenue will be recorded when it is earned and

expenses will be recorded when they are incurred. Boba Blended chose the accrual method to have a

more accurate picture of how the business is performing over the long-term. Additionally, Boba Blended

will maintain records aligned with GAAP.


Page 21

Balance Sheet

See Figure 6

A balance sheet is organized to list the assets and liabilities Boba Blended maintains on the first day of

operations. After paying off loans and other expenses, an expected cash and cash equivalents asset of

$15,850 is reported on the balance sheet for March 1, 2018. Other assets and liabilities are aligned with

the start-up analysis or loan. However, a $200 accounts payable is not aligned with the start-up analysis

or loan in the balance sheet. Every week Boba Blended will receive fresh, hormone-free milk from a

nearby dairy store, Oberweis, to not only build a relationship with the local business, but to ensure fresh

and local ingredients are going into the products. Oberweis will bill Boba Blended at the end of every

period, with Boba Blended using accrual-basis accounting, the expense is immediately recorded at the

beginning of operations.

Start-up Analysis

See Figure 7

Boba Blended will need a start-up capital of $107,000. This start-up consists of three investments:

owners’ cash contributions of $20,000, leasehold improvements of $47,000, and family investors’

$40,000 loan. Each owner will invest $10,000 to the business. Arcore Real Estate Group, the landlord,

offers $47,000 in leasehold improvements for signing a five year rent agreement contract. Additionally,

Arcore agreed to postpone rent charges until operations begin. The family investors expect a monthly

return on the $40,000 loan with a 5% interest rate amortized monthly over five years. Arcore also

projected the cost to remodel the building to be $50,000. Resulting in an expected total start-up expense

of $91,150. The beginning cash balance of $15,850 will be used to pay the loan and other expenses

during the first two months of reconstruction and remodeling.

Loan

See Figure 8

A loan schedule for family investors consisting of the principal, interest, number of periods, yearly and

monthly payments, and the first year of amortization is created to ensure proper returns on the

investment. The investors expect their loan of $40,000 to be returned over five years, with a 5% interest

rate compounded monthly on the amount owed. The monthly payment Boba Blended must make to pay

off the loan completely in five years is $754.85.


Page 22

Figure 6: Boba Blended Balance Sheet Figure 7: Boba Blended Start-up Analysis Sheet

Figure 8: Boba Blended's Loan Schedule


Page 23

Year 1 Monthly Cash Flow

See Figure 9

Boba Blended will begin construction and remodeling in January, and expects to begin operations at the

beginning of March. Having a beginning cash balance of $15,850 after start-up costs (See Figure 7) allows for

expenses incurred during the months of construction and remodeling to be covered. For example, in the

month of January, an operating expense of $800 (a result of purchasing insurance and an operating

license) and a loan expense of $754.85 has accrued. This results in an ending cash balance of $14,295.15

for the month of January. This situation is the reason for borrowing a loan larger than the total start-up

expense.

As shown on the projected statement of cash flow for year ending December 31, 2018, loan expense and

depreciation expense are separate from the operating expense. While these two expenses are included in

operating expenses on the income statement, they are separated on the cash flow statement to clearly

show where cash is being spent. This separation will allow for more accurate judgement of budgeting and

follows GAAP.

When operations begin in March, a negative cash flow of $1,234.46 is projected. Sales are anticipated to

be relatively low in the first month, due to the expectation that customers are to be hesitant to try a new

and unique store. However, with Boba Blended’s marketing and sales strategy, sales are expected to grow

over the year causing an increased cash flow. Typical boba tea stores experience a decrease in cash flows

in September, due to change in seasons from summer to fall. However, Boba Blended’s target market of

students and business people will increase cash flows and, in turn, maintain steady sales during these

periods.


Page 24

Year 1 Monthly Income Statement

See Figure 10

Boba Blended’s monthly income projections were calculated through approximating average daily traffic

(approximately 240) and the average spending per customer ($5). One of Boba Blended’s main

competitors, Starbucks, has an average daily traffic of 500 and each customer typically spends $7-9. Boba

Blended’s numbers were underestimated to ensure Boba Blended can handle the worst-case scenario.

Furthermore, typical boba tea shops in the U.S. spend 20% of sales on producing their products; however,

since Boba Blended will provide organic, fresh ingredients, Boba Blended will estimate cost of goods sold

to be 25% of sales. Lastly, Boba Blended accounts sales allowances as 5% of sales to cover the expense of

having discounts and fundraisers. By offering discounts and fundraisers, Boba Blended hopes to draw in

new customers and build a larger customer base. Through successful marketing, curious customers, and

location, Boba Blended expects these increased costs and precautions to result in higher profit.

Operating expenses were calculated through actual estimates or projections from nearby competitors.

Boba Blended has several fixed expenses, such as rent and insurance, as well as several variable expenses,

such as supplies and utilities. The fixed expenses make up 61.1% of the total sales. The variable expenses

make up 3.53% of the total sales (income tax and operating profit make up the remaining percentage). To

ensure proper marketing and financial projections, marketing expense, repairs and maintenance are

classified as a fixed expense every month. If the budget for these expenses is not achieved in the month,

the remaining balance will rollover to the next month. If the budget for these expenses is not enough in

the month, the balance for future months will be decreased accordingly. This will allow Boba Blended to

continue branding and maintain the wellness of the store. Situations like this explain why the variable

expenses make up a small percentage of the total sales.

Overall, Boba Blended is projected to make a profit of $16,335.94 in the first year of operations. This

profit may be used toward upkeep of the store, additional marketing expenses, or unexpected payment

of the loan. Owners will receive no portion of the profit; however, Timothy and Nicholas understand that

their salaries will increase with the success of the business. Additionally, Timothy and Nicholas are

motivated by passion, not greed, to run Boba Blended, creating a strong focus on growing the business

rather than growing their salaries.


Page 25

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Page 26

Yearly Income Statements for Years 1, 3 & 5

See Figure 11

As mentioned in the 1st year monthly income statement analysis, sales for year one were calculated by

approximating average daily traffic (240~) and the average spending per customer ($5). Sales for year

three are projected to be a 13.68% increase from year one, due to advertising, word-of-mouth, and being

in operations for 12 months, rather than ten months. Sales for year five are projected to be a 38%

increase from year three, due to implementing and executing the company’s three-year goals, having a

solid customer base, and successful marketing. Similar to year one, Boba Blended anticipated a 5% sales

allowance for each year to cover the fundraising, donating, and discount expenses. Additionally, Boba

Blended will maintain its 1:4 ratio of cost of goods sold to ensure a large enough budget to purchase fresh

ingredients.

Salaries increase each year due to owners’ increase in pay ($35,000 each in the first year, $42,500 each in

the third year, and $55,000 each in the fifth year); increase in employment to keep up with customer

traffic, and employee pay. Other expenses are calculated through analysis of other nearby stores’ costs,

actual calculations through wholesalers, or are fixed. The rent expense is fixed for five years, at $28 a

square foot for 4704 square foot building. The rent is high due to the prime location of Boba Blended;

however, this location will serve better for the business in the long run. The location will be more visible

and will be easily accessible for all students and business people in Lake County. Another important

expense to note is the depreciation expense. Depreciation expense drastically changes from year 3 to

year 5 due to new additions of equipment to keep up with traffic flow increase.

While Boba Blended’s sales are underestimated and expenses are overestimated compared to nearby

competitors, Boba Blended is projected to still incur profit in year one, three, and five. This indicates

strong success early on and will allow for long-term goals to have proper funding to be implemented.

Similar to the year one monthly income statement, all operating profits may be used toward upkeep of

the store, additional marketing expenses, or paying off the loan. However, an increase in sales and

promotion from Boba Blended will ultimately increase the salaries of the owners, incentivizing them to

grow the business.


Page 27

Financial Assumptions

1. Boba Blended will operate in a fiscal year of 360 days

2. Cost of goods sold to be 25% or less of sales

3. Sales allowance to be 5% or less of sales

4. Loan will be paid at the minimum amount per month

5. Maintain financial records according to GAAP

Figure 11: Boba Blended's Projected Yearly Income Statements


Page 28

Supporting Documents

Boba Blended Menu

1 2

3 4


Page 29

Opening Day Flyer

As seen in the start-up analysis,

$1,000 is allocated for advertising

and the grand opening. This amount

will primarily go toward printing and

posting flyers a month in advance,

advertising through social media, and

creating an online website. As seen in

the flyer, Boba Blended will be

opening March 1, 2018. The flyer

includes what products will be

offered: boba tea, smoothies, coffee,

and tea. The goal of including this

information on the flyer is to intrigue

customers to what boba tea is and

the variety of other options to choose

from when entering this store.

Additionally, social media and a

website on the flyer will prompt

online engagement. It is crucial to

Boba Blended that the company

maintains an online presence with the Lake County community to stay connected with what customers

want and to bring in new customers. Boba Blended will have an entire user-friendly website ready by

February before flyers are hung around town, and social media pages will be updated with progress on

rebuilding and reminders of the opening day.


Page 30

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